Western Midstream to Acquire Aris Water Solutions for $1.5 Billion, Expanding Permian Basin Footprint

Western Midstream, a leading shale pipeline operator, has announced its intention to acquire Aris Water Solutions in a deal valued at around $1.5 billion. The acquisition, which will be funded through a mix of cash and stock, is aimed at expanding Western Midstream's footprint into the rapidly growing water treatment sector within the Permian Basin.

According to the terms of the agreement, Aris shareholders will receive either 0.625 shares of Western Midstream common stock or $25 in cash for each share of Aris stock they own. This offer represents a 23% premium over Aris's closing price on the previous trading day. The cash option may be adjusted proportionally, with the maximum cash payout capped at $415 million.

This strategic acquisition positions Western Midstream as one of the largest water resource contractors in the Permian Basin. Aris currently manages approximately 790 miles of wastewater pipelines in the region, with the capacity to process 1.8 million barrels of wastewater daily. The Permian Basin is the largest oil-producing region in North America, and the significance of wastewater treatment in oil production cannot be overstated. For every barrel of oil produced, approximately five barrels of wastewater are generated, making wastewater treatment a critical component of oil production operations.

The primary method for handling this wastewater involves transporting it through pipelines to disposal wells for underground injection. Over the past 15 years, the volume of water treated in the Permian Basin has increased more than sevenfold, highlighting the growing importance of this sector within the oil and gas industry. This acquisition will enable Western Midstream to leverage Aris's extensive infrastructure and expertise to enhance its water management capabilities and support the growing demand for water treatment services in the Permian Basin.

Western Midstream's largest shareholder is Occidental Petroleum. The acquisition of Aris aligns with Western Midstream's strategy to diversify its business and capitalize on the increasing demand for water treatment services in the oil and gas industry. By expanding into this sector, Western Midstream aims to create long-term value for its shareholders and strengthen its position as a leading provider of midstream services in the Permian Basin.